This matters, macroeconomically. The “dry powder” dynamic of consumer-led post-lockdown growth is a particularly important part of the “where is the bloody recession” dynamic unfolding in the US. As put by Francois de Soyres, Dylan Moore and Julio Ortiz of the Fed: As households have built up an unprecedented stock of savings, an important question going forward revolves around the use of this stock and to what extent “excess savings” will continue to drive spending in the coming quarters. In a context of persistently high underlying inflation and continuing imbalances between supply and demand in many countries, it is especially important to assess the pace at which households are expected to spend their excess savings and continue to maintain a high level of aggregate demand. As the chart above indicates, the US looks like shit, or “currently completely exhausted,” as employees put it.
They add: "Given the more rapid reduction in excess savings, aggregate demand in the United States is likely to have been more supported than in other countries over the past year." By contrast, all other advanced economies Russia Mobile Number List recorded savings equivalent to 3% or 5% of GDP, which “should last until the end of the year.” Winkler expanded on this analysis, noting the small size of the Fed's sample, expanding the sample, and using an alternative methodology proposed by the Fed. Interestingly, their conclusions are similar but different: greater divergence and a substantially larger cash reserve for investors. HODLer heroes from Canada and the UK. He writes: The UK and Canada probably had at least 10% of the value of GDP in excess savings; Australia and the eurozone probably had at least 5% of GDP left.
Overall, these numbers are consistent with the strong demand outlook so far this year, and especially the surprising growth dynamics in Canada and the United Kingdom. However, the highlight is Sweden: which never went into full lockdown, so this dynamic was completely missed: Winkler says there are two takeaways from this: First, the divergence in excess savings over the past year or so is consistent with our medium-term view that the US economy slows more rapidly in the second half and that the Fed is closer to easing policy than most other central banks in the G10. Secondly, while the UK and Eurozone could hold out a little longer thanks also to excess savings, the lack of excess savings supports our view that Sweden faces even stronger headwinds.